Fear has stalked international markets this week as the world tries to get to grips with the devastation in Japan - the latest in a succession of events including earthquakes, revolutions, floods and droughts.

And behind it all, the global financial crisis is still casting a shadow over fragile recoveries.

Global commodity and equity prices plummeted before bouncing back as confidence was shaken and bargain hunters stepped in.

The international economy is more connected than ever and the dramatic events of recent weeks raise questions about how widespread the impact will be.

The Herald has spoken to industry leaders and economists to try to shed light on the answers.

Andrew Ferrier, Fonterra chief executive

Andrew Ferrier says global events can bring short-term aberrations but nothing he would be concerned about in the longer term.

"Although these are huge events ... these are not things which dictate a fundamental change to the global economic environment," Ferrier says.

"In the short-term consumers go into shock and they don't buy the optional things that they would otherwise buy but there tends to be huge pushes to get things back to normal and then consumers start spending again," he says. "It won't derail things but generally it'll slow down recoveries and so on."

Food was reasonably immune to economic shocks.

There had been droughts in Russia and China, dry weather in New Zealand and floods in Australia and Brazil.

"All these things get discounted in and as people start watching what's going on in various different products but they tend to have shorter term impacts."

In times of crisis, such as in Japan, it was important to keep the food chain replenished.

"Food has to keep moving in the country and food has to keep coming into the country and you'll always have huge efforts to make sure that happens."

There was an advantage to having a broad scope by being a global player at times like this, Ferrier says.

"If you were a uniquely Japanese business, for example, or uniquely a Christchurch business you could be put out of business," he says. "We have such a broad scope that you have a disaster in one place and you've got so many other cylinders firing at the same time that you can easily handle it."

Rod Drury, Founder of software firm Xero

Kiwi tech entrepreneur Rod Drury says New Zealand companies have often been slow to extend their reach into foreign markets but the earthquakes in Christchurch and Japan have changed things.

"Now the world feels quite different, it puts a bit of urgency [on businesses]."

The slow economic environment at home will also make technology firms seek out overseas markets, Drury says.

"At Xero, it makes us want to pin our ears back and really accelerate what we do in the United States so we can keep growing the pie."

As well as putting pressure on exporters to perform, Drury says the Government needs to play its part.

"We definitely now want to see some of this partial privatisation so New Zealanders can invest in growing out some of the businesses we already own.

"[We need] all sorts of improvements in resource consents to just get things done and free the flow of investment."

The Christchurch earthquake had "knocked New Zealand for six" but there were still reasons for optimism.

"Dairy is still looking really good, strong commodity prices mean there is still cash coming in. There will also be money spent in the fix-up for Christchurch so there are some positive things happening."

Jonathan Ling, Fletcher Building chief executive

Fletcher Building boss Jonathan Ling says the Christchurch earthquake caused significant disruption to the business but acknowledges the view of analysts that it stands to gain substantially in the 2012 financial year.

Ling puts more emphasis on the fallout from Japan on the global stock markets.

"The impact of Japan's disaster could be significant but indirect for Fletcher Building," he says.

"Obviously the consequences of the earthquake and tsunami are affecting equity and financial markets around the world, and there will likely be knock-on impacts on commodity prices, but what this will translate to in the medium to long term is unclear at present.

"From a business perspective, the two disasters have really highlighted the need to have strong contingency plans and emergency support arrangements in place. Also, we can expect to see a tightening of building codes in earthquake zones."

In Canterbury, the entire construction industry was mobilising to get rebuilding under way, but the reality was it would take some time before Christchurch was fully rebuilt.

"The priorities are essential services, temporary housing and business premises," he says.

"In terms of Japan, it's not a huge market for us but we do sell roof tiles there. Our roof tiles work really well in earthquake and high wind areas, so we could see some increased demand as rebuilding gets under way in the medium term," he said.

Ling and investor relations manager Philip King are just back from visiting shareholders and investment specialists in Australia, the United States and Europe, and King said questions revolved mainly around Christchurch and Fletcher's $1 billion takeover of Australia's Crane Group.

Cameron Bagrie, ANZ Chief Economist

Economist Cameron Bagrie says the global economy is on the mend, although people are a lot more cautious in light of events in Japan.

"We're going to be prone to the odd setback and these sorts of events will be difficult to absorb because there just isn't the scope for policy makers to respond as would normally be the case, because of course they've already responded to the global financial crisis," Bagrie says.

The world is a very fragile place.

"The issue when you go through these sorts of shocks is that policy makers don't have too much more ammunition."

The usual policy response to this sort of shock would be to cut interest rates and the government to spend more money.

But interest rates in Japan were already zero and government debt was 200 per cent of gross domestic product.

"I'm not sure those options are that feasible for the likes of Japan."

People were starting to think about what recent events would do to the Japanese economy, global consumer trends and confidence, but at the moment nobody knew.

Shamubeel Eaqub, NZIER Principal Economist

Japan is one of the biggest economies in the world with a prominent position in supply chains, particularly for manufacturing, says economist Shamubeel Eaqub.

"There are some concerns around whether or not we're going to have a short-term shock in terms of demand in the next few months," he says. "I don't know the answer to that."

The global shocks came on top of very weak confidence data seen in advanced economies and high oil prices. "We were only on the path of a nascent recovery and then we had the shock from oil prices, now we have the shock from the earthquake and tsunami in Japan," Eaqub says.

"It need not be that there's a big impact on real demand but right now there's just a huge amount of uncertainty and there's escalation of uncertainty also around the revolutionary tensions in the Middle East," he says. "It's all happening at the same time."

Japan was a big producer of memory chips and prices had risen in the past few days.

"There's already a market signal for other producers to increase production," Eaqub says. "That's what happens in most places following a natural disaster."

After the Napier earthquake in 1931, rental prices rose sharply relative to the rest of the country.

"There was a big incentive for private investors to invest in new housing and increase the supply of housing in Napier, which helped speed up the recuperation process," he says. "The same things we would expect to happen on a more global scale."

Brent Robinson, Rakon Managing Director

Brent Robinson says the impact of the Japanese disaster on the supply chain will effect manufacturers around the globe but won't send the world back into recession.

"Only 5 or 7 per cent of Japan has been affected," Robinson says. "But obviously there could be a slowdown in certain sectors, especially if the supply chain gets upset. That's got to have some ripple effect."

Rakon's crystal oscillators are made in Europe, New Zealand and India and are vital components of products like smartphones and GPS systems, as well as telecomm-unications infrastructure.

The Mt Wellington-based company sources supplies out of Japan, such as ceramic packaging for oscillators and semiconductors.

"Some of these suppliers do have factories in Japan that haven't been damaged but they could be affected by power outages and transportation [issues]," he says.

Most of Rakon's customers followed a "dual sourcing" policy, which meant they sourced product from a Japanese company as well as from the Kiwi firm.

After the Japanese disaster, customers of Rakon's Japan-based competitors were increasing orders from the New Zealand company because it was considered a safer supplier.

Ross Green, Wellington Drive Technologies

New Zealand manufacturing firms could get "caught in the cross fire" of the Japanese disaster, warns the boss of a listed firm.

Ross Green, chief executive of North Shore electronic motor maker Wellington Drive Technologies, says the supply chain could be adversely affected if a major manufacturer suddenly faced shortages of a component sourced in Japan.

"Let's say if [a firm] like Dell or Apple have their deliveries from Japan affected, what can happen is one of the component suppliers will say 'we need to change over all the production in one of the China or Thailand plants to meet Apple's requirements'," says Green.

Japanese firms were often the sole suppliers of mundane components used in the electronics industry.

Component suppliers often bent over backwards to meet demand from the biggest players in the market, which could leave small operators in a perilous situation.

He says Wellington Drive has its component supplies secured for the next six months.

"I think we're all right for now, but other [businesses] will need to remain vigilant."